Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-3 - CAPITAL GAINS AND LOSSES: SPECIAL TOPICS  

Division 122 - Roll-over for the disposal of assets to, or the creation of assets in, a wholly-owned company  

Subdivision 122-B - Disposal or creation of assets by partners to a wholly-owned company  

Same-asset roll-over consequences for the company (disposal case)

SECTION 122-200   Consequences for the company (disposal case)  

122-200(1)    
There are these consequences for the company in a disposal case if the partners choose to obtain a roll-over. They are relevant for interests in each *CGT asset (except a *precluded asset) that the partners *disposed of to the company.

Note 1:

A capital gain or loss from a precluded asset can be disregarded: see Subdivision 118-A .

Note 2:

The reduced cost base (as determined under this section) may be modified for a roll-over happening after a demerger: see section 125-170 .

Interests acquired on or after 20 September 1985

122-200(2)    
If all of the partners ' interests in an asset were *acquired on or after 20 September 1985:

(a) the first element of the asset ' s *cost base (in the hands of the company) is the sum of the cost bases of the partners ' interests in the asset when it was disposed of; and

(b) the first element of the asset ' s *reduced cost base (in the hands of the company) is the sum of the reduced cost bases of the partners ' interests in the asset when it was disposed of.

Note:

There are special indexation rules for roll-overs: see Division 114 .

Interests acquired before 20 September 1985

122-200(3)    
If all of the partners ' interests in an asset were *acquired before 20 September 1985, the company is taken to have acquired it before that day.

Note:

A capital gain or loss from a CGT asset acquired before 20 September 1985 is generally disregarded: see Division 104 . This exemption is removed in some situations: see Division 149 .

Interests acquired on or after and before 20 September 1985

122-200(4)    
If some of the partners ' interests in an asset (the original asset ) were *acquired on or after 20 September 1985 and some before that day, the company is taken to have acquired 2 separate *CGT assets:

(a) one (which the company is taken to have acquired on or after 20 September 1985) representing the extent to which the partners ' interests in the original asset were acquired by the partners on or after that day; and

(b) another (which the company is taken to have acquired before that day) representing the extent to which the partners ' interests in the original asset were acquired by the partners before that day.

122-200(5)    
The first element of the *cost base of the separate asset that the company is taken to have *acquired on or after 20 September 1985 is the sum of the cost bases of the partners ' interests in the original asset that they acquired on or after that day.

Note:

There are special indexation rules for roll-overs: see Division 114 .

122-200(6)    
The first element of its *reduced cost base is worked out similarly.